Philippine Trade Gap Widens to USD 4.87 Billion in July 2024

The Philippines’ trade deficit widened in the last year as the country’s exports failed to keep up with the rising costs of imports. Latest data from the Philippine Statistics Authority recorded a trade deficit of USD 4.87 billion (PHP 271.63 trillion) as of July 2024, increasing by 18 percent from the USD 4.12 billion (PHP 229.76 trillion) recorded last July 2023. This has been the widest gap between imports and exports since the USD 5.02 billion trade deficit recorded in March 2023. 

Total external trade in goods amounted to USD 17.37 billion in July 2024, a 4.5 percent increase from the USD 16.62 billion in July 2023. Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael Ricafort noted that this is due to the seasonal increase in importation activities during the third quarter, a trend that has been observed for many years. He pointed out that the lower commodity prices in the global market have made imported goods attractive to Filipino buyers. Mr. Ricafort also highlighted that the recent strengthening of the peso-to-dollar rate has made imports cheaper and exports more expensive.  

Furthermore, the country’s agricultural sector also experienced a widened trade deficit of 13.8 percent or in the April-June period, as imports of agricultural products continued to surpass local farm production. Agricultural imports amounted to USD 4.94 billion while agricultural exports totaled only USD 1.86 billion, resulting in a deficit of over USD 3.07 billion. This is higher than the recorded deficit of USD 2.7 billion in the same period of 2023, amidst both imports and exports increasing by over 14 percent year-on-year.  

Mr. Ricafort further attributed the increase in imports and exports to “lower base/denominator effects” since July 2023, along with the further opening of the economy after the COVID-19 pandemic. He noted that it also reflects the rise in global commodity prices driven by the El Niño phenomenon, which contributed to higher prices of agricultural goods and impacted both imports and exports. 

Export Statistics  

Total export value barely moved from USD 6.246 billion in July 2023 to USD 6.245 billion for July 2024. Electronic products, the top export of the country in terms of value, also experienced a drop of 11.9 percent to USD 3.25 billion from USD 3.69 billion from July 2023. Meanwhile, the United States remained the top destination for Philippine exports, with total exports to the US valued at USD 1.06 million.  

Alongside electronic products, the following commodity groups are the highest in terms of value: 

According to Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo Asuncion, exports are unlikely to post “significant gains” for the rest of the year. “The sober export outlook in the second half of 2024 is against a backdrop of lackluster China growth and risk of slower prospects for developed markets that already prompted key central banks, led by the European Central Bank, Bank of England and Bank of Canada, to start dismantling their high-interest rate structures to prioritize growth moving forward, likely to be followed by the US Federal Reserve,” Mr. Asuncion added.  

Import Statistics

As exports remained sluggish, total import value as of July 2024 increased by 7.2 percent year-on-year to USD 11.12 billion from USD 10.37 billion in July 2023. This is the second-highest increase in annual imports since the 13-percent increment recorded in April 2024. This is also the highest import value in more than a year since the USD 11.62 billion recorded in March 2023.  

The Philippines mostly imported electronic products in July 2024  equivalent to over USD 2.53 billion, 11.8 percent higher than the USD 2.27 billion recorded in July 2023. China was the biggest source of imports for this month, accounting for USD 3.08 billion or 27.7 percent of the total import value.  

The following products with the highest import value were also recorded:

University of Asia and the Pacific Senior Economist Cid Terosa said that the economic expansion since the fourth quarter of 2023 has driven the demand for imported goods. Mr. Terosa also anticipated the trade gap to widen further in the coming months due to the rising demand for imports, especially in the busy production period leading up to the holidays.